Crocs, Inc. Reports Quarterly Revenues of Over $1 Billion, Up 6% Over Last Year

• Revenues were $1,045.7 million, an increase of 6.2% from the same period last year, or 5.8% on a constant currency basis. DTC revenues grew 17.8%, or 17.7% on a constant currency basis. Wholesale revenues fell 3.6% compared to 2022, or down 4.3% on a constant currency basis.
• Gross margin was 55.6% compared to 54.9% in the prior year. Adjusted gross margin improved 230 basis points to 57.4% compared to 55.1% in the same period last year.
• Selling, general, and administrative expenses ("SG&A") of $307.8 million increased from $277.2 million in the same period last year, and SG&A as a percent of revenues rose to 29.4% from 28.1% in prior year. Adjusted SG&A increased to 29.1% of revenues versus 27.2% for the same period last year.
• Income from operations increased 3.7% to $273.9 million and operating margin fell slightly to 26.2%, compared to 26.8% for the same period last year. Adjusted income from operations rose 7.8% to $295.9 million and adjusted operating margin improved 40 basis points to 28.3%.
• Diluted earnings per share increased 5.5% to $2.87, as compared to $2.72 for the same period last year. Adjusted diluted earnings per share increased 9.4% to $3.25 compared to 2022.

Third Quarter 2023 Brand Summary

• Crocs Brand: Revenues increased 11.6%, or 11.1% on a constant currency basis, to $798.8 million. DTC comparable sales increased 15.3%. Wholesale revenues increased 4.5%, or 3.6% on a constant currency basis.
  • North America revenues of $480.7 million increased 8.0%, or 8.2% on a constant currency basis.
  • Asia Pacific revenues of $175.2 million increased 26.5%, or 28.6% on a constant currency basis.
  • Europe, Middle East, Africa, and Latin America ("EMEALA") revenues of $142.8 million increased 8.3%, or 2.7% on a constant currency basis.
• HEYDUDE Brand: Revenues during the third quarter decreased 8.3% to $246.9 million. DTC revenues increased 14.6% to $100.4 million. Wholesale revenues declined 19.4% to $146.5 million following prior year pipeline fill and as our wholesale partners were more cautious on at-once orders.

Balance Sheet and Cash Flow

• Cash and cash equivalents were $127.3 million as of September 30, 2023, compared to $191.6 million as of December 31, 2022.
• Inventories decreased to $390.2 million as of September 30, 2023, compared to $471.6 million as of December 31, 2022 and $513.7 million as of September 30, 2022.
• Capital expenditures during the nine months ended September 30, 2023 were $86.4 million, compared to $89.6 million for the same period last year, reflecting continued investments in our distribution centers and expansion of our corporate facilities to support growth.
• Borrowings were $1,938.7 million as of September 30, 2023 compared to $2,322.4 million as of December 31, 2022, as we repaid $389.1 million of debt year to date. Our liquidity position remains strong with $127.3 million in cash and cash equivalents and $563.7 million in available borrowing capacity as of September 30, 2023.

Share Repurchase Activity

During the third quarter we resumed our share repurchase program, repurchasing $150.0 million or approximately 1.4 million shares of our common stock at an average price of $107.85 per share. Following these repurchases, $900.0 million of share repurchase authorization remained available for future repurchases. Our capital allocation priorities remain debt paydown and  repurchasing shares as we approach our long-term net leverage target of 1.0x to 1.5x.

Financial Outlook

Fourth Quarter 2023

With respect to the fourth quarter of 2023, we expect:

• Revenues to decline approximately 1% to 4% compared to fourth quarter 2022, resulting in revenues of approximately $903 million to $938 million at currency rates as of the end of the last reported period.
• Adjusted operating margin of approximately 21.0%.
• Adjusted diluted earnings per share of $2.05 to $2.35.

Full Year 2023

With respect to 2023, we expect:

• Consolidated revenue growth to now be approximately 10% to 11% compared to 2022, resulting in revenues of approximately $3,905 to $3,940 million at currency rates as of the end of the last reported period.
  • Revenues for the Crocs Brand to grow approximately 12% to 13% on a reported basis.
  • Revenues for the HEYDUDE Brand to now grow approximately 4% to 6% on a reported basis, implying a decline of approximately 4% to 6% including the period prior to the HEYDUDE acquisition.
• Adjusted operating margin to now be approximately 27.0%.
• Non-GAAP adjustments of approximately $60 million primarily related to investments in our distribution centers to support growth and an anticipated non-cash impairment for our corporate headquarters. We expect these adjustments to be fairly balanced across cost of sales and SG&A.
• Combined GAAP tax rate to be approximately 23% and non-GAAP effective tax rate of approximately 20%.
• Adjusted diluted earnings per share to now be between $11.55 and $11.85. Adjusted diluted earnings per share guidance does not assume any impact from potential future share repurchases.
• Capital expenditures to now be approximately $125 to $135 million, primarily related to the expansion of our distribution capabilities including our new HEYDUDE distribution center in Las Vegas, implementation of technology systems for HEYDUDE, and expansion of our corporate facilities to support growth.

Conference Call Information

A conference call to discuss third quarter 2023 results is scheduled for today, Thursday, November 2, 2023, at 8:30 am ET. To receive conference call details, please register at the Investor Relations section of the Crocs website, investors.crocs.com. The webcast will also be available live and on replay through November 2, 2024 at this site.

About Crocs, Inc.:

Crocs, Inc. (Nasdaq: CROX), headquartered in Broomfield, Colorado, is a world leader in innovative casual footwear for all, combining comfort and style with a value that consumers know and love. The Company's brands include Crocs and HEYDUDE, and its products are sold in more than 85 countries through wholesale and direct-to-consumer channels. For more information on Crocs, Inc. visit investors.crocs.com. To learn more about our brands, visit www.crocs.com or www.heydude.com. Individuals can also visit https://investors.crocs.com/news-and-events/ and follow both Crocs and HEYDUDE on their social platforms.

Forward Looking Statements

This press release includes estimates, projections, and statements relating to our business plans, commitments, objectives, and expected operating results that are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

These statements include, but are not limited to, statements regarding potential impacts to our business related to our supply chain challenges, cost inflation, our financial condition, brand and liquidity outlook, and expectations regarding our future revenue, margins, non-GAAP adjustments, tax rate, earnings per share, debt ratios and capital expenditures, share repurchases, the acquisition of HEYDUDE and benefits thereof, Crocs' strategy, plans, objectives, expectations (financial or otherwise) and intentions, future financial results and growth potential, statements regarding fourth quarter and full year 2023 financial outlook and future profitability, cash flows, and brand strength, anticipated product portfolio and our ability to deliver sustained, highly profitable growth and create significant shareholder value. These statements involve known and unknown risks, uncertainties, and other factors, which may cause our actual results, performance, or achievements to be materially different from any future results, performances, or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the following: our expectations regarding supply chain disruptions; the COVID-19 pandemic and related government, private sector, and individual consumer responsive actions; cost inflation; current global financial conditions, including economic impacts resulting from the COVID-19 pandemic; the effect of competition in our industry; our ability to effectively manage our future growth or declines in revenues; changing consumer preferences; our ability to maintain and expand revenues and gross margin; our ability to accurately forecast consumer demand for our products; our ability to successfully implement our strategic plans; our ability to develop and sell new products; our ability to obtain and protect intellectual property rights; the effect of potential adverse currency exchange rate fluctuations and other international operating risks; and other factors described in our most recent Annual Report on Form 10-K under the heading "Risk Factors" and our subsequent filings with the Securities and Exchange Commission. Readers are encouraged to review that section and all other disclosures appearing in our filings with the Securities and Exchange Commission.

All information in this document speaks only as of November 2, 2023. We do not undertake any obligation to update publicly any forward-looking statements, whether as a result of the receipt of new information, future events, or otherwise, except as required by applicable law.

Category:Investors

CROCS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (in thousands, except per share data)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenues	$                1,045,717		$                   985,094		$                3,002,250		$                2,609,823
Cost of sales	464,081		443,792		1,322,937		1,245,864
Gross profit	581,636		541,302		1,679,313		1,363,959
Selling, general and administrative expenses	307,784		277,239		852,044		733,255
Income from operations	273,852		264,063		827,269		630,704
Foreign currency losses, net	(1,770)		(393)		(1,622)		(1,115)
Interest income	506		31		1,225		219
Interest expense	(39,207)		(34,142)		(124,907)		(86,357)
Other income (expense), net	24		16		448		(512)
Income before income taxes	233,405		229,575		702,413		542,939
Income tax expense	56,380		60,226		163,433		140,515
Net income	$                   177,025		$                   169,349		$                   538,980		$                   402,424
Net income per common share:
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